Sanofi refocuses to tackle key business challenges

Sanofi is reorganising its business units from seven to five in a bid to streamline its operations and ensure the success of its ambitious product launch plans.

The revamp is the first major action by recently-appointed chief executive Olivier Brandicourt, who took the top job at the French pharma major in April in the wake of the acrimonious departure of former CEO Chris Viehbacher and a long search for a successor.

The objective is to create five divisions focusing on diabetes and cardiovascular medicines, speciality medicines, emerging markets, vaccines and animal health that Brandicourt says will be more specialised and – somewhat reminiscent of AstraZeneca's (AZ) strategy under Pascal Soriot and Pfizer's slimmed-down structure – be built around key 'growth drivers'.

Under the new structure, due to come into effect next January, Sanofi's cancer and immunology pipeline with now sit alongside subsidiary Genzyme's rare disease and multiple sclerosis (MS) therapies in Sanofi Genzyme, a new speciality pharma unit led by Genzyme's current CEO David Meeker.

The division will have responsibility for Sanofi's underperforming cancer R&D unit that was revamped earlier this year, as well as key immunology candidates including arthritis therapy sarilumab and dupilumab for asthma.

Two key objectives for Sanofi under Brandicourt are to have a successful debut for cholesterol-lowerer Praluent (alirocumab) and a successful defence of its diabetes franchise, a responsibility that has been handed to Pascale Witz, currently executive vice president, global divisions and strategic development, who will lead the new diabetes and cardiovascular unit.

Praluent needs to capitalise on what could be a first-to-market advantage over rival PCSK9 inhibitor Repatha (evolocumab) from Amgen, although there are signs that pharmacy benefit managers (PBMs) in the US may already be planning to play hardball on the price of both drugs, possibly denting peak sales expectations of multiple billions of dollars.

Brandicourt's restructuring comes at a time when the company is facing some key challenges in its diabetes franchise, including headwinds for $7 billion-a-year insulin product Lantus (insulin glargine) that accounted for nearly 20 per cent of the company's revenues last year but is facing flat growth in 2015.

One of the key priorities for Witz is a successful launch for Lantus follow-up Toujeo, which hinges on whether Sanofi can make a compelling case for switching patients currently taking Lantus to the new, premium product.

It also needs to make a success of inhaled insulin Afrezza, which the company licensed from MannKind last year to bolster its diabetes franchise, although some analysts have suggested it might be better for Brandicourt to ditch the product, which was brought in-house by Viehbacher.

The third new business unit – emerging markets – bundles Sanofi's generic medicines and older products still in patent with the company's consumer healthcare products, emphasising that in common with peers such as AZ and GlaxoSmithKline (GSK) the company attaches importance to pursuing a low price/high volume strategy alongside the development and sale of premium products. It will be led by Peter Guenter, executive vice president of global commercial operations.

Sanofi Pasteur and Merial will continue as Sanofi's vaccines and animal health products divisions, respectively, headed by their current bosses Olivier Charmeil and Carsten Hellmann.

Sanofi has stated that it does not anticipate job losses as a result of the restructuring, according to a report in French newspaper Les Echos.

Brandicourt said the new structure "simplifies and focuses Sanofi to optimise growth," adding: "this is a necessary step for ensuring that Sanofi's new medicines and vaccines continue to build on our heritage of providing innovative healthcare therapies."